BILL NUMBER: AB 343	CHAPTERED  07/28/99

	CHAPTER   217
	FILED WITH SECRETARY OF STATE   JULY 28, 1999
	APPROVED BY GOVERNOR   JULY 27, 1999
	PASSED THE ASSEMBLY   JULY 15, 1999
	PASSED THE SENATE   JULY 12, 1999
	AMENDED IN SENATE   JUNE 23, 1999
	AMENDED IN SENATE   JUNE 9, 1999

INTRODUCED BY   Assembly Member Campbell

                        FEBRUARY 11, 1999

   An act to amend Section 53635.7 of, and to add Sections 53601.2
and 53635.2 to, the Government Code, relating to local government
finance.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 343, Campbell.  Local agency finance:  commercial paper:
investments and borrowing.
   (1) Existing law sets forth the various types of investments in
which a local agency may invest the money belonging to or in custody
of the agency, including its surplus money.  Purchases of commercial
paper for these purposes may not exceed 15% of the agency's surplus
money which may be invested.  An additional 15%, or a total of 30% of
the agency's money or money in its custody, may be invested in
commercial paper.  The additional 15% may be so invested only if the
dollar-weighted average maturity, as defined, of the entire amount
does not exceed 31 days.
   This bill instead would authorize counties to make purchases of
commercial paper for these purposes that may not exceed 40% of the
county's surplus money that may be invested, without the requirement
that the dollar-weighted average maturity of the entire amount not
exceed 31 days.  It would additionally specify that no more than 10%
of the county's surplus money that may be invested may be invested in
the outstanding paper of any single issuing corporation.
   (2) Existing law requires the legislative body of a local agency
to discuss, consider, and deliberate each decision that involves
borrowing in the amount of $100,000 or more as a separate item of
business on the agenda of its meeting.
   This bill would provide that for this purpose "borrowing" does not
include bank overdrafts.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 53601.2 is added to the Government Code, to
read:
   53601.2.  Notwithstanding subdivision (g) of Section 53601, the
board of supervisors of a county may invest in commercial paper of
"prime" quality of the highest ranking or of the highest letter and
numerical rating as provided for by Moody's Investors Service, Inc.,
or Standard and Poor's Corporation.  Eligible paper is further
limited to issuing corporations that are organized and operating
within the United States and have total assets in excess of five
hundred million dollars ($500,000,000) and an "A" or higher rating
for the issuer's debt, other than commercial paper, if any, as
provided for by Moody's Investors Service, Inc., or Standard and Poor'
s Corporation.  Purchases of eligible commercial paper may not exceed
180 days' maturity nor represent more than 10 percent of the
outstanding paper of an issuing corporation.  Purchases of commercial
paper may not exceed 40 percent of the agency's surplus money that
may be invested pursuant to this section.  No more than 10 percent of
the agency's surplus money that may be invested pursuant to this
section may be invested in the outstanding paper of any single
issuing corporation.
  SEC. 2.  Section 53635.2 is added to the Government Code, to read:

   53635.2.  Notwithstanding subdivision (g) of Section 53635, the
board of supervisors of a county may invest in commercial paper of
"prime" quality of the highest ranking or of the highest letter and
numerical rating as provided for by Moody's Investors Service, Inc.,
or Standard and Poor's Corporation.  Eligible paper is further
limited to issuing corporations that are organized and operating
within the United States and have total assets in excess of five
hundred million dollars ($500,000,000) and an "A" or higher rating
for the issuer's debt, other than commercial paper, if any, as
provided for by Moody's Investors Service, Inc., or Standard and Poor'
s Corporation.  Purchases of eligible commercial paper may not exceed
180 days' maturity nor represent more than 10 percent of the
outstanding paper of an issuing corporation.  Purchases of commercial
paper may not exceed 40 percent of the agency's surplus money that
may be invested pursuant to this section.  No more than 10 percent of
the agency's surplus money that may be invested pursuant to this
section may be invested in the outstanding paper of any single
issuing corporation.
  SEC 3.  Section 53635.7 of the Government Code is amended to read:

   53635.7.  In making any decision that involves borrowing in the
amount of one hundred thousand dollars ($100,000) or more, the
legislative body of the local agency shall discuss, consider, and
deliberate each decision as a separate item of business on the agenda
of its meeting as prescribed in Chapter 9 (commencing with Section
54950).  As used in this section, "borrowing" does not include bank
overdrafts.
